CEO Bertling Predicts Civil/Military Rotorcraft Market Parity by 2025

Eurocopter CEO Lutz Bertling during a press conference in early January. Eurocopter photo by Lorette Sabre.

During his now legendary confident performance at Eurocopter’s annual start of the year address to the European aviation press in Paris, President & CEO Lutz Bertling dropped the bombshell that the value of the global civil verses military helicopter markets will have attained parity at between €6.5-7 billion each by the year 2025.

He attributed the decline to the cutbacks in defense spending in the major military markets of the West combined with the completion of deliveries on large existing programs worldwide. He said it was unlikely that “strong demand” and the return of growth in the military market would appear until the acquisitions began to replace current and new fleets around 2035-2040.

Answering questions regarding the U.S. Joint Multi Role (JMR) requirement, he stated that it would have a “strong influence in the 30s and 40s.”

According to Eurocopter’s research, the current standing of the military market is worth triple that of the civil market will continue and even grow to an unequal €5.5 billion (civil) verses €18.2 billion by 2015. From then on however, while the civilian market continues its steady growth, military sales significantly reduce to around one third of their value over the next decade.

EUROCOPTER LONG TERM MARKET FORECAST

Civil & Parapublic/Military market (value in billion Euros)

Year

2006

2010

2015

2020

2025

Civil

3.0

4.5

5.5

6.5

7.0

Military

7.2

11.2

18.2

13.0

6.5

EUROCOPTER GROWTH 1992-2011

Performance Area

1992

2011

Turnover

€1.8bn

€5.4bn

Deliveries

214

503

Bookings

164

457

Market Volume Share

Civil

27.7%

43%

Military

8.8%

21.5%

Headcount

12,000

20,000
(of which 6,000 outside Europe)

However the steady increase in the civil market will be addressed by Eurocopter in the way that it has grow its business to 2012—a landmark year in that the company can celebrate 20 years of success. Bertling ascribed that success to “our people (who) have made Eurocopter the number one helicopter company in the world.”

Eurocopter was formed in 1992 from the merger of Aerospatiale-matra (France) and DaimlerChrysler Aerospace (Germany). The company began with €1.8 billion turnover and grew it over 20 years to €5.4 billion, representing a 206 percent growth.

Bertling said, “Proximity to the customer—being local to them—is a key success factors which we have in Eurocopter.”

Talking about the downturn in world gross domestic product (GDP), which slipped from 4.0 percent in 2007 to –2.0 percent in 2009 then back up to 4.0 percent by 2011, he showed an uninterrupted growth in Eurocopter’s turnover during that period.

“Through the strategy that we have developed we never stopped growing. Last year we had 12 percent growth, although that included the acquisition of Vector Aerospace, but even without that there would still have been a growth rate of over 7 percent,” he said, adding that the results were still better than 2010 and better than the EADS average.

Bertling said that he is satisfied with the results and with improved performance, including more than €200 million annual savings gained through Eurocopter’s SHAPE program launched in 2009 (based on a need for short term savings, improving product and longer term investment).

Some of those savings have been partially reinvested in innovating for the future he claimed. “Our investment in research and development in 2011 was three times higher than in 2006—and we can afford this.”

EUROCOPTER PERFORMANCE IN TURNOVER AND DELIVERIES VS. GLOBAL GDP

Year

2006

2007

2008

2009

2010

2011

Global GDP

4.1%

4.0%

1.7%

-2.0%

3.9%

4.0%

Turnover (€bn)

3.8

4.2

4.5

4.6

4.8

5.4

Deliveries (qty)

381

488

588

558

527

503

EUROCOPTER BOOKINGS IN 2011 PER PRODUCT FAMILY

Type

2010

2011

EC120 Colibri

12

13

Ecureuil/Fennec/EC130 family

143

238

EC135

67

42

EC145

52

104

Dauphin/Panther/EC155 family

27

21

EC175

(N/A)

4

Super Puma / Cougar/

EC225/EC725

45

35

Tiger

0

0

NH-90

0

0

Customer support continues to be “a growing business for Eurocopter, with an increase in consolidated turnover by activity from 33 percent in 2010 to 38 percent in 2011. Customer support goes on as long as helicopters are flying—so increasing this service is clearly a target.”

Production accounts for 51 percent of turnover. The split between civil and military turnover was 47 and 53 percent, respectively, which Bertling said was normal. Export turnover activity was at 72 percent and rising.

Bertling stated that Eurocopter leads the civil/parapublic sector with a 43 percent market share (representing 773 helicopters in 2011), allocating 18 percent of the market to AgustaWestland and 16 percent to Bell Helicopter. He also highlighted Robinson Helicopter’s presence in the single turbine market (6 percent)—doing business “where no other company does.”

In terms of military, he listed Eurocopter as having a 21.5 percent market share and third behind Sikorsky (29 percent) and Russian Helicopters (23 percent). “Honestly, we cannot beat these two,” he declared. “Even if we deliver helicopters to the U.S. Army/Navy we will not become the number one, as a European OEM, to the U.S. markets.” Also the closed military markets of Russia and China—and they are both huge military markets, although we are trying to be present there.”

Order intake in 2011 for Eurocopter totalled 457 helicopters, with 15 cancellations (mainly where there were two competitors for one contract, and the loser canceled).

Around 43 percent of bookings per activity is in services and this is a clear indication of the growth of the service area as it is crisis resilient. Military bookings have declined to 32 percent against 68 percent in the civil sector. In terms of types ordered the figures were as follows:

Taking a quick scan across these figures, he said he could not remember “when there was so little military helicopter order activity. He said that the Ecureuil growth was a startling comeback.

The German National Police’s EC135 fleet recently topped 100,000 flight hours. The National Police has one of the largest parapublic fleets in the world with 41 EC135s. Photo courtesy of Eurocopter

“Partially a shift between EC135 and EC130, in particular in the U.S., going from light twins to single engine helicopters. Some operators are shifting to large cabin, single engine helicopters. But the trend is to a Eurocopter from a Eurocopter—EC135 to EC130.”

He also singled out the growth of the EC145 T2, which had a positive response from the market. The EC175 and EC225 figures look down, but Bertling explains this by saying that the figures are only representative of bookings where a down payment has already been made. For military multi-year bookings the company only takes into account the annual deliveries.